The financial market offers great opportunities for people interested in working in this sector. One of these is Investment Banking, a profession that is growing and performs important functions, such as raising funds through an Initial Public Offering (IPO), for example.
However, the Investment Banker can perform many different functions, and we will get to know some of them today. In addition, you will learn how you can become a professional in this area, what the average salary is, and some useful tips. Enjoy your reading!
What is Investment Bank?
The Investment Bank is a service offered by investment banks with the objective of executing financial operations for big companies or institutional clients. These operations are not executed by normal banks, since the financial volume transacted exceeds hundreds of millions and can reach billions, which is common depending on the operation.
Some common operations are:
- Opening the company’s capital on the stock market;
- Fundraising to finance projects or expansion;
- Mergers or acquisitions of companies;
- Financing large companies;
- Restructuring of the company;
As we can see, the target public of Investment Banking are medium and large companies that are seeking expansion and need large financial resources. Because of this, the Investment Banking professional is usually very well paid. We will talk about remuneration later on.
What does an Investment Banker do?
The Investment Banker is responsible for mediating the negotiation between the company interested in raising funds and the potential investors interested in the operation, with the objective of establishing an agreement between these parties.
To ensure the operation, the investment banks guarantee all the necessary structure, offering legal structuring, financial evaluation, operational questions, etc. The service is complete and covers a series of operations, ensuring that the interests of both parties are evaluated to make the business viable.
Let’s analyze what an Investment Banker professional usually does:
IPO of the company
One of the most important activities of the Investment Bank business is IPO. The professional and his team must offer operational as well as strategic advice so that the company can emit stocks or titles in the financial market.
The objectives of these operations are mostly to raise funds for the company to expand its activities, either by investing in new factories, new inputs, or even to acquire new companies. The best known operations are Initial Public Offering (IPO), subscriptions, secondary offerings, convertible bond offerings, and others.
Mergers or acquisitions
This is one of the main activities performed by specialists in Investment Banking. He advises companies interested in merging or acquiring new companies. It can provide advice to companies interested in divesting, although this activity is not so common.
Fundraising for financing
Another tool that companies use to finance themselves is by issuing debt securities, also called debentures. The company hires the Investment Bank to evaluate the best way for the company to obtain financing and if it is feasible, the company can issue loan certificates.
These certificates are issued with a maturity date and remuneration. The interested investor loans the money to the company, which in return pays the investor a remuneration.
What is the salary of an Investment Banker?
The national average salary for an Investment Banker is $24,105 per month or $289.000 per year, according to the company Glassdorr. Despite this, professionals can be paid much more with experience in the profession, reaching as much as $40,000 per month, including salary and bonuses.
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How to become an Investment Banker?
To become an Investment Banker requires a lot of study and dedication. Regarding graduate school, there is no requirement to major in a specific area. However, it is recommended to have a background in something that adds to your knowledge, especially in corporate finance. Courses in Economics or Business Administration can help in this area.
As said, it is necessary to have a deep knowledge of corporate finance. One of the certifications that ensure such knowledge and that are recommended for professionals who are interested in working with Investment Banking is the CFA (Chartered Financial Analyst Program).
The CFA is the best known financial certification in the world and is offered by the CFA Institute. By obtaining the CFA title, you ensure that you have in-depth knowledge of financial products, equities, analytical skills on the economic scenario, macroeconomics, microeconomics, portfolio management, and much more!
Tips to become an Investment Banker
We have separated some important tips for you who are interested in becoming an Investment Banking professional. Check them out!
Study areas
As stated before, there is no need for a specific college to work as an Investment Banker. However, fields such as Economics, Business Administration, and Accountability are recommended, since they cover topics that are required in the area. Knowledge of tools such as Microsoft Excel is desirable, as well as analytical problem-solving skills.
Previous experience
Another important tip is to have some previous work experience, especially in banks. Look for jobs in banks to understand the dynamics of a bank, get to know it better, and learn how to behave correctly in the financial environment.
Networking
Finally, it is of the utmost importance that you get to know people who are already working in the field or have proximity to make it easier for you to enter the profession. Try to establish relationships with these people, participate in financial leagues if you are in a university, or make contact with someone on social networks who already works as an Investment Banker, if you know someone.
Frequently Asked Questions (FAQ)
What does an Investment Bank professional do?
The professional who works with Investment Banking needs to offer a financial, legal, and operational structure to its clients. It provides advisory services for: IPO, raising of funds for financing, mergers and acquisitions, company restructuring, financial analysis, valuation, stock pricing, and others.
How much does an Investment Banker make?
The average salary of an Investment Banker is US$24,105 per month. However, depending on how long the professional has been working, the compensation can reach US$40,000 per month with salaries and bonuses.
Do I need to have college to work with Investment Banking?
There is no specific training to work with Investment Banking, but ideally you should have some college. Degrees such as Business Administration, Accountancy and Economics are recommended, since they cover some of the content required to work as an Investment Banker.
Do I need to be certified to work as an Investment Banker?
Yes, it is very important to have a certification that ensures that you have the ability to work in the profession. One of the recommended certifications for those who wish to work in the field is the CFA.
